No-fault reform gearing up in House, but may sputter in Senate

Michigan Capitol | Susan J. Demas

The House is likely to take up an auto no-fault insurance overhaul Wednesday or Thursday, sources say, but the Senate may not have much appetite to give it another go this session.

Senate Majority Leader Arlan Meekhof (R-Grand Haven) has said he was not planning on taking up the issue again. And his spokesperson confirmed today that it’s not at the top of his legislative list before the term-limited senator leaves Jan. 1.

Arlan Meekhof

“There have been absolutely no discussions in the Senate about auto no-fault,” said Amber McCann, a spokeswoman for Meekhof. “It’s not something he was planning for. We have some other things that are in the queue, above that topic.”

But a plan is nonetheless circulating among GOP House lawmakers to try again for an overhaul to the state’s no-fault auto insurance law. It mirrors a proposal backed by Detroit Mayor Mike Duggan that failed to pass both chambers last year.

This year, Duggan and Quicken Loans founder Dan Gilbert are urging lawmakers to take up the issue again before the legislative session comes to an end. A push to rewrite the state’s no-fault insurance law is somewhat of a Lame Duck tradition in Lansing.

The Michigan Advance obtained an early draft of the legislation and confirmed with multiple sources that Duggan and Gilbert are again pushing for a tiered auto insurance option. Past supporters of such a system say it would offer more affordable rates to Detroiters, who pay some of the highest auto rates in the nation.

The early draft substitute of Senate Bill 1014, sponsored by Sen. Joe Hune (R-Fowlerville), would create a lower-cost option that covers up to $250,000 of health costs related to a catastrophic crash, with a mid-level option cap at $500,000 and a third-tier offering unlimited personal injury protection (PIP). The Senate passed an earlier version of the bill in June.

It’s nearly identical to a Duggan-backed plan that failed in a 45-63 House vote last year and would require a 40 percent reduction in personal injury protection costs under the lowest-cost option.

That plan would direct $225,000 to emergency care in an auto accident, with the remaining $25,000 allotted for any ongoing medical costs.

The new substitute legislation would also stop insurance companies from using non-driving factors such as credit score to set rates.

Donna Lasinski

Democrats say the legislation would still allow companies to use credit scores, however. It also does not stop insurers from using ZIP codes — a factor that has landed Detroit with some of the highest rates in the nation.

“It’s providing some smoke in mirrors around non-discriminatory rating factors. And that’s very concerning to me,” said Rep. Donna Lasinski (D-Scio Twp.).

The Ann Arbor-area lawmaker continued, “It’s kind of like someone took a thesaurus and said, ‘Can we find another word for credit scoring’?’”

She said that while the bill would prohibit credit scores from being used, it still allows companies to use a “credit rating,” which is a proprietary mix of factors that can include credit score, occupation and salary.

Some Republicans contend that there have to be non-driving factors included in insurance rates.

Rep. Joseph Bellino (R-Monroe) who campaigned on reforming the state’s auto no-fault law, said his constituents “don’t want to pay for Wayne County’s car theft.

“I believe in non-driving factors; we have to have some rules to make it right for people,” Bellino said.

Joseph Bellino

However, Bellino said Michigan rates are far too high and questions why people who already have health insurance, including seniors and people on “fixed incomes,” have to pay for personal injury protection included in their auto rates.

“I’ll go to my grave saying our no-fault system sucks. I think we should blow it up.”

The Coalition to Protect Auto No-Fault (CPAN) has been circulating 10 reasons why the new legislation shouldn’t pass. The group said the plan is a bad deal for seniors because they “are not given the choice to retain the part of no-fault coverage that makes it possible for them to stay in their home if they sustain severe, disabling injuries in an auto accident.”

CPAN also contends the plan increases risks of bankruptcy and taxpayer liability and would be a “disaster” for the the health care economy.

Reporter Andrew Roth contributed to this report.

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